Most analysts expect the National Bank of Romania (BNR) to cut the policy rate at its July 5 board meeting, for the first time since the rate was set at 7% in January 2023. 

However, there is not a full consensus and some analysts point to elements that could further defer this step: the inflationary impact of the higher excise duties as of July, and the cautious positioning of the European Central Bank (ECB) and US Fed as well as local peers in the region. 

The Fed postponed its decision to cut interest rates, while the ECB suggests that the decrease in June will be the only one this year.

"Chances are high for a 25 basis point (bp),” according to Adrian Codirlașu, vice-president of CFA Romania, who sees the key rate at 6-6.5% by the end of the year. 

“The only risk is fuel excise duty and its effects on inflation,” he pointed out, though.

"We anticipate that the central bank will keep the monetary policy rate unchanged at the meeting on July 5, although the chances of a decrease of 0.25 pp are not negligible (we estimate that they are 30%),” stated Valentin Tătaru, chief economist of ING Bank, on a cautious note.

The headline inflation may have dropped to 5% in June and is expected at 4.2% by the end of the year, said Tataru. He expects further 25bp cuts in August and November, along with updated Inflation Reports from the central bank.

For BCR chief economist Ciprian Dascalu there is no doubt that the central bank will cut the rate on July 5, because inflation dropped below 5% in June.